Trying to Value Online Privacy
Interesting paper: “The Value of Online Privacy,” by Scott Savage and Donald M. Waldman.
Abstract: We estimate the value of online privacy with a differentiated products model of the demand for Smartphone apps. We study the apps market because it is typically necessary for the consumer to relinquish some personal information through “privacy permissions” to obtain the app and its benefits. Results show that the representative consumer is willing to make a one-time payment for each app of $2.28 to conceal their browser history, $4.05 to conceal their list of contacts, $1.19 to conceal their location, $1.75 to conceal their phone’s identification number, and $3.58 to conceal the contents of their text messages. The consumer is also willing to pay $2.12 to eliminate advertising. Valuations for concealing contact lists and text messages for “more experienced” consumers are also larger than those for “less experienced” consumers. Given the typical app in the marketplace has advertising, requires the consumer to reveal their location and their phone’s identification number, the benefit from consuming this app must be at least $5.06.
Interesting analysis, though we know that the point of sale is not the best place to capture the privacy preferences of people. There are too many other factors at play, and privacy isn’t the most salient thing going on.
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